Nomura Securities Maintains a 'Neutral' on Frontier Communications (FTR); Dividend in Focus

Nomura Securities maintains a 'Neutral' on Frontier Communications (NASDAQ: FTR) price target lowered from $6.50 to $5.50.

Analyst, Mike McCormack, said, "In our view, investors are clearly factoring in a high degree of risk to Frontier’s $0.75 annual dividend. Based on the current ~$4.90 stock price, shares are trading with a ~15% dividend yield. By our estimates, the dividend payout ratio will likely exceed 100% through 2013, and with only ~$300mn of cash on hand to service ~$2bn in debt maturities over the next three years, sustainability looks challenging. Despite the clear risk to the dividend, we think that investors have already discounted the event. By our estimate, Frontier shares are already pricing in a $0.50 annual dividend, or the midpoint of our future dividend scenarios. Additionally, short interest does not appear to be elevated. We have revised our estimates on a more conservative outlook: 2012E EPS from $0.26 to $0.23."

For an analyst ratings summary and ratings history on Frontier Communications click here. For more ratings news on Frontier Communications click here.

Shares of Frontier Communications closed at $4.87 yesterday.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Nomura/Instinet Upgrades Genting Singapore (GENS:SP) (GIGNY) to Neutral
• UBS Reiterates Buy Rating on HF Sinclair (DINO)
• Cantor Fitzgerald Reiterates Overweight Rating on Merlin Labs (MRLN)